Card Processing Fees in the Philippines: What Merchants Pay and Why You Can’t Charge It to Customers

If you accept cards, you've probably noticed that the payout never matches the sale. A ₱1,000 card payment on our standard rate lands in your balance as ₱950. Where the other ₱50 goes isn't a secret, but almost nobody explains it in a way that helps you decide what to do about it. So this is our attempt.

We also want to clear up the surcharge question while we're at it, because merchants ask us about it a lot and the answer surprises people.

How much are card processing fees in the Philippines?

On PayMongo, a local Visa or Mastercard payment costs 3.125% plus ₱13.39 per transaction. International cards are 4.02% plus ₱13.39. Both are before VAT, and VAT is 12% on the fee only, not on the sale. 

Here's the same ₱1,000 sale across the methods most merchants offer, at standard rates.

The ₱13.39 is the part people underestimate. It's the same whether the sale is ₱100 or ₱10,000, so on a ₱100 sale you're paying ₱16.52 plus VAT and keeping around ₱81.50. That's an 18% effective rate on a small basket. QR Ph has no fixed fee, which is a big part of why it took over low-value retail here so quickly. There's a calculator on our pricing page if you want to plug in your own numbers.

Two other costs don't show up in the table. When you refund a customer, they get the full amount back but the fee you paid stays paid. And when a cardholder disputes a charge (a chargeback), the full amount is held from your next payout and there's a ₱800 fee on top, which you only get back if you win. 

You have five working days to respond and the bank takes 60 to 90 days to decide. Our disputes guide goes through it properly, but the short version is: process refunds fast so they never become disputes.

What is MDR and where does the money go?

The fee a merchant pays on a card payment is called the merchant discount rate, or MDR. (If you Googled "MDR" and got PhilHealth results, that's the Member Data Record. Different thing.) It's really three fees stacked together.

Interchange is the biggest piece and it goes to the bank that issued the customer's card. Visa and Mastercard set the rates, and they vary a lot: a rewards credit card costs more to accept than a plain debit card, and a card issued abroad costs more than a local one because cross-border interchange is higher and the issuing bank is carrying currency risk. That's most of the gap between 3.125% and 4.02%.

Scheme fees go to Visa and Mastercard themselves, for running the network and for the rulebook that makes a BPI card work on a terminal owned by someone else. Smaller slice, but it's on every card transaction, and it doesn't exist for QR Ph or e-wallets.

The rest is ours, or whichever processor you use. It covers the connection to the networks, 3-D Secure, fraud screening, handling disputes, PCI compliance, settlement to your bank, and the dashboard and support team. It's also the only part of the stack a processor actually controls, so when a sales rep tells you they can "lower your card rate", this is the slice they're negotiating with.

QR Ph doesn't touch any of that. It runs on InstaPay, a domestic rail under the BSP, so there's no foreign scheme setting interchange, no scheme fee, and far fewer disputes because the customer approves the payment inside their own bank or wallet app. That's how 1.34% is possible.

Why cards still matter even if most of your sales are QR Ph

We looked at our retail merchants during 10.10 week this year. QR Ph was 92% of transactions. Cards were under 3%. But by value, cards carried 11% of what shoppers spent, because the average card basket was roughly four times the average QR Ph payment. People reach for a card when the ticket is big, when they want to pay on credit or installments, or when they're paying from abroad.

So card fees are a value problem, not a frequency problem. A shop doing ₱500,000 a month with 10% of that on cards pays about ₱1,600 in card fees before VAT and the fixed fee. The same shop with half its value on cards pays closer to ₱7,800. The first thing to do, before anything else in this article, is find out which of those you are.

What changes the card rate you get

Standard pricing is what everyone starts on. From there, four things move it.

#1: Volume

Big monthly volume gets custom rates, with us and with everyone else, because the cost of serving you is spread across more transactions. If you're doing serious volume, talk to sales rather than reading the pricing page.

#2: What you sell 

Card networks assign every business a merchant category code, and some categories carry higher interchange or more disputes. Travel, gaming and subscriptions generally pay more than a retail store.

#3: Where the card was issued

Local vs international is the single biggest swing, see the table. If a chunk of your customers are paying with foreign cards, your blended rate will look worse than the headline.

#4: Your average ticket 

Same ₱13.39 on a ₱150 coffee and a ₱15,000 aircon. The smaller your average card sale, the higher your effective rate, which is why a lot of low-ticket merchants just push QR Ph instead of negotiating.

Can you charge customers a credit card surcharge in the Philippines?

For consumer sales, no. We know plenty of merchants do it anyway. It's still not allowed.

DTI's Administrative Order No. 10, series of 2006, issued under the Consumer Act, says a customer paying by credit, debit or ATM card pays the price on the tag and nothing more. It also bans having a cash price and a separate card price for the same item. DTI has said this publicly more than once and card surcharges are a named category on its consumer complaint form. First offence is a fine of up to ₱5,000 and/or one to six months in jail. Repeat offenders can lose their business permit.

Calling it something else doesn't help. A "convenience fee", "bank charge" or "terminal fee" that only appears when the customer picks a card is a card surcharge as far as DTI is concerned. What matters is what triggers the extra amount.

QR Ph is the same in practice. When BSP launched QR Ph P2M it was explicit that the paying customer pays no fee; the merchant carries the cost.

There are two exceptions worth knowing. A genuine discount for paying in cash or by a cheaper method is fine, as long as the posted price is the real price and the discount is clearly shown. DTI has said a cash discount needs a sales promotion permit and visible signage. 

And B2B is different, because the Consumer Act protects consumers, not companies buying from companies. A fee on an invoice between two businesses is a contract matter. 

One more thing, because this trips people up. If you've read a US article saying Visa and Mastercard allow surcharges of up to 3% or 4%, that's US scheme rules after a US lawsuit. It has nothing to do with the Philippines.

What to do about card fees instead

Since passing the fee on is out for consumer sales, the real question is how you carry it. Merchants here mostly land on one of these four.

Pricing it in is what most merchants should do, and it's the easiest to get right. Take last month's payout reports, divide total fees by total sales, and that's your blended rate. Add it to your cost base and set prices once. If cards are 10% of your value and QR Ph is the rest, your blended cost at standard rates is under 2%. Most businesses can carry that without customers noticing a price change.

Steering is free and works well when tickets are small. Customers here already prefer QR Ph for everyday purchases, so putting it first in your checkout or on your counter is just following what they already do. Keep cards on for the people who need them. The customer buying a ₱20,000 item on credit is worth the 5%.

Absorbing it quietly is fine while card share is low. Look at it again once cards cross maybe a fifth of your value. At that point it's a real line item and worth a conversation about custom rates.

How to decide

Pull three numbers from your dashboard: average card transaction, share of sales value on cards, and your gross margin on a typical sale.

A merchant with a ₱6,000 average card ticket, 15% of value on cards and a 40% margin is paying about 0.75% of revenue in card fees. Price it in and stop thinking about it. A merchant with a ₱300 average card ticket and 40% of value on cards is closer to 3% of revenue, and should steer customers to QR Ph, ask about custom rates once volume justifies it, or both.

If you're on PayMongo, your payout reports already break fees down per transaction and per method, so this takes ten minutes. If you're comparing providers, compare the whole thing and not just the percentage: fixed fee, VAT treatment, refund and dispute fees, settlement time. A lower headline rate with a bigger fixed fee can cost you more on small tickets. Current rates for every method are on the pricing page. 

Frequently asked questions